The Panama Canal Authority (ACP) is adding a daily transit slot at its Neopanamax locks and raising the maximum authorized draft to 49 feet, a reversal from the escalating restrictions it imposed through September as a developing El Niño threatened water supplies.
In an advisory to shipping companies on Monday, the canal’s operator increased bookings of the larger Neopanamax vessels from nine to 10 per day for dates beginning Oct. 15, lifting total daily capacity across the Neopanamax and Panamax locks to 33 slots.
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The draft limit, an increase from the 48-foot limit the canal had put in place in late August, took effect Tuesday and stands until further notice.
The authority cited current and projected lake levels, near-average precipitation across the canal’s watershed and the water-saving measures in place at the locks as reasons for the about-face. The ACP already postponed a scheduled Oct. 1 reduction to 47.5 feet after reassessing weather forecasts and water levels at Gatún Lake, the rainfall-fed reservoir that supplies water to the canal’s lock system.
The canal had cut daily transits from 36 to 34 on Sept. 4 and then again to 32 on Sept. 15, and a fiscal 2027 budget draft submitted to Panama’s parliament had penciled in an average of 29.5 daily transits for October, the first month of the fiscal year. That figure was built on a severe El Niño scenario, but it showed how dire officials expected conditions could get.
In late August, the canal’s own outlook had Gatún Lake’s water levels falling by more than a foot by the end of October, to 82.6 feet. As of Wednesday, the average is expected to be 85.7 feet for the month.
The outlook changed as September rainfall pushed the lake’s levels higher. Official observed lake levels climbed from about 84 feet in the first week of the month to 84.8 feet on Sept. 30, according to the canal’s data, and the September average of roughly 84.3 feet finished above August’s 84.2-foot average.
The lake still sits about 0.4 feet below the five-year September average of 85.2 feet, but the seasonal pattern favors further gains: the five-year average for October is 85.5 feet and for November 86.5 feet.
The authority cautioned that the water deficit in the watershed continues and that the transit reservation system remains the only way to guarantee a transit date, warning that vessels without reservations could face “indefinite” delays. Analysts are equally cautious about how long the relief lasts.
“Improved conditions now do not mean that restrictions won’t be introduced in the coming months if the expected El Niño negatively impacts the rainy season that normally lasts into January,” said Judah Levine, head of research at Freightos, in a market update Wednesday.
That uncertainty is particularly relevant given how quickly conditions can change at the waterway. The authority has noted that the most pronounced effects of moderate or strong El Niño events tend to surface the following year, as in the periods of 1982-83, 1997-98, 2015-16 and 2023-24. During the most recent months-long drought period, the canal operator cut daily transits from 38 to 22.
The immediate picture for the canal is considerably less strained than it was just a few weeks ago. The authority’s dashboard showed 49 vessels waiting to transit on Wednesday morning, including 48 with reservations and one without, down from 118 vessels, 107 booked and 11 unbooked, at the end of August, when average northbound waits had topped 10 days.
That improvement comes after shipping companies spent months absorbing the costs of reduced capacity. At the same time, the waterway has absorbed diverted traffic as disruptions to commercial shipping through the Strait of Hormuz pushed demand toward alternative routes.
Hapag-Lloyd said in mid-September that draft limits had cut cargo-carrying capacity on affected vessels and raised costs through priority auctions, surcharges and alternative routings.
South Korea’s SK Gas paid a record $5.3 million at auction for a Sept. 1 transit by the liquefied petroleum gas (LPG) carrier G. Spirit, which had sat at anchor off Panama’s Port of Balboa since Aug. 19, topping the $4.6 million record the same company set in early August. By contrast, the authority said the median auction price from October 2025 through February 2026 was $55,000.
Bulk carriers have faced similar pressure, with BIMCO reporting bulker transits down 22 percent year over year since the beginning of July as vessels competed for limited slots.
For U.S. shippers, the stakes are particularly high. In 2024, 52 percent of canal transits had U.S. ports of origin or destination and more than 76 percent of the cargo that transited was U.S.-bound or U.S.-origin, according to the authority.
“The Canal remains committed to closely monitoring water conditions and rainfall levels and to communicating any further adjustments in a timely manner, as circumstances allow,” the authority said.
